Data’s Role in Big Tech’s Antitrust Fight

The era of minimal oversight for the biggest technology companies appears to be ending. The Justice Department and FTC will split oversight of Google and Amazon, and the Supreme Court gave the go-ahead to a long-simmering antitrust suit against Apple. Taken together, it is becoming clear that lawmakers are poised to take regulatory action.

How to best regulate the biggest technology companies, however, is an open question. Germany’s antitrust chief, Andreas Mundt, believes in stemming the free supply of personal data that Google and Facebook have monetized. In February, his organization ruled that “Facebook would now have to stop automatically collecting and combining [user data] and instead give German users a choice.” They also ruled to disallow the company from “merging information from Facebook accounts with data from the users’ accounts on other Facebook-owned services…without permission.”

The most impactful, lingering question for technology companies like Facebook and Google is whether the U.S. will borrow from Europe’s model or create an entire new set of regulations.

Data as Currency

Online platforms are constantly monitoring user behavior in order to monetize it. User habits are tracked and parsed to help tech companies “infer characteristics about interests, personal connections and financial demographics [in order to] better target advertising, or train machine-learning algorithms that can be used for future products.” When done well, it is an “extraordinarily lucrative business model…Facebook made $55 billion from advertising last year, while Google’s ad sales totaled $116 billion.”

Mundt has previously warned about Big Tech’s data collection habits. Facebook’s data-sharing partnerships were not news to him, Mundt told Politico. “I was a bit surprised so many people were so surprised,” said Mundt. “It is clear that Facebook does something with the vast amounts of data it gathers. That is [its] business [model].”

Antitrust Law vs. Big Tech

What concerns Mundt is not “the generation of data” itself so much as “what in the end happens with the data.” Regulators have grown increasingly aware of how access to data equates to an outsized advantage for monetization, which in turn diminishes competitors from entering the marketplace. According to the New York Times, Mundt has said that Facebook “controls more than 95 percent of the social networking market in Germany,” which he believes “unfairly forces people to make an all-or-nothing choice between agreeing to unlimited data collection or not using Facebook at all.”

Regulators around the world are taking note of Mundt’s arguments, and Europe in general has provided an early roadmap. Margrathe Vestager, head antitrust regulator for the European Union, has been more willing to dole out fines than most (like the $1.7 billion fine levied against Google for its online advertising practices), when grappling with perceived anticompetitive behavior. Central to market dominance, says Vestager, is data. “We think much more about access to data when it comes to, for instance, misuse of position of a monopoly,” said Vestager at the Viva Technology conference. “If you have no access to data, you won’t be able to make it in the market because you cannot access potential customers.”

Potential Paths Forward

Lawmakers have been slow to recognize that regulatory rules for legacy industries do not necessarily apply to the rapidly shifting digital landscape. While the role data plays in determining a tech company’s success has become more obvious, there is little consensus on how regulators should proceed.

Vestager believes that Facebook should be forced to share its data with competitors to level the playing field. Facebook co-founder Chris Hughes advocated in a New York Times op-ed that the company, whose reach has expanded significantly with the acquisitions of popular services like Instagram and WhatsApp, needs to be dismantled – a position shared by some US politicians, like Senator Elizabeth Warren.

Each method will need to withstand legal scrutiny in different countries, making a one-size-fits-all approach around the world unlikely. Critics have cautioned that Mundt’s data-limiting technique “will make it harder to offer free services,” while potentially causing “unintended consequences and disruptions.” Eline Chivot, a senior policy analyst for the Center for Data, “a group funded by a Washington think tank whose board includes representatives from Amazon, Apple and Microsoft,” told the New York Times that European regulatory efforts “[use] competition policy to pursue objectives that are unrelated to competition.”

Mundt himself argues that regulators should aim to innovate, not strictly follow the German playbook. New ideas are being proposed and studied; new expertise is being cultivated. What regulators seem to agree on is that competition breeds a better, higher-quality tech landscape. The present digital economy figures to look much different in the future.

Quandary Peak Research

Based in Los Angeles, Quandary Peak Research provides software litigation consulting and expert witness services. We rapidly analyze large code bases, design documents, performance and usage statistics, and other data to answer technical questions about the structure and behavior of software systems.

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